customer ltv calculator.
lifetime value with retention curve
- gross ltv (aov × freq × lifespan)
- $1,020
- net ltv (with margin)
- $561
- ltv : cac ratio
- 11.22×
> worked example
Your store has an AOV of $85, customers order 4 times per year, gross margin is 55%, and average lifespan is 3 years. Gross LTV is $1,020 (85 × 4 × 3). After applying the 55% margin, net LTV is $561. With a $50 blended CAC, the LTV:CAC ratio is 11.22×, well above the 3× benchmark typically used to signal a healthy acquisition model.
takeaway, Net LTV is what you can actually reinvest. A 3:1 LTV:CAC ratio is the floor; anything below means acquisition is outrunning monetisation.
> when operators reach for this
- DTC operators deciding how aggressively to spend on acquisition, the LTV:CAC ratio sets the ceiling on CAC.
- Subscription brand operators modelling the impact of improving retention by even half a year on total customer value.
- CMOs presenting unit economics to a board or investor who will ask 'what is a customer worth to us?'
- Growth leads stress-testing LTV assumptions when margin is being compressed by rising COGS or promotions.
- Finance teams setting customer acquisition budgets for the next quarter based on cohort-level LTV data.
> the calculation
- gross ltv
aov × purchase frequency (per year) × customer lifespan (years) - net ltv
gross ltv × gross margin %The margin-adjusted figure you can actually spend to acquire customers. - ltv : cac ratio
net ltv ÷ cac3× is the conventional healthy minimum; below 1× the business is underwater on acquisition.